Second Quarter 2022 Highlights
- Revenue of $139.6 million, up 51.9% as compared to prior year
period.
- GAAP net income of $26.5 million, or 18.9% of sales, up 59.9%
as compared to prior year period.
- Adjusted Net Income of $31.7 million, or 22.7% of sales, up
45.3% as compared to prior year period.
- Adjusted EBITDA of $41.1 million or 29.4% of sales, up 35.2% as
compared to prior year period.
- Flight equipment sales consisted of three aircraft and three
engines, which included two AerSale converted Boeing 757 freighter
aircraft.
- Continue to monetize Boeing 757s with one additional AerSale
converted freighter aircraft scheduled to be sold in 2022 and up to
twelve additional aircraft to be converted to freighters by third
parties and become available to lease or sell in 2023 and
2024.
- Reaffirms 2022 guidance: expects revenue in the range of $420 -
$450 million and adjusted EBITDA in the range of $80 - $90
million1.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the second quarter ended June 30, 2022. The
Company’s revenue for the second quarter of 2022 was $139.6 million
compared to $91.9 million in the second quarter of 2021. Revenue
for the second quarter of 2022 included $92.5 million of flight
equipment sales versus $42.7 million of flight equipment sales in
the prior-year period. Flight equipment sales in the second quarter
of 2022 consisted of three aircraft and three engines, which
included two Boeing 757 freighters converted by AerSale and the
early delivery of one Boeing 747 freighter which closed at the end
of the second quarter but was internally forecasted to close in the
third quarter. Leasing revenue for the current quarter reflected
increased utilization from the Company’s leased flight equipment
compared to the year ago period. Revenue from Used Serviceable
Material (USM) also improved compared to the same quarter last year
due to an increase in demand and availability of feedstock.
TechOps revenue declined during the second quarter when compared
to the same quarter in the prior year, driven in part by lower
storage maintenance at both AerSale’s Roswell and Goodyear
facilities as the return of aircraft into operation gained
momentum. In addition, allocation of labor and hangar space to
support AerSale’s Boeing 757 passenger-to-freighter (P2F)
conversion line reduced available capacity and MRO revenue for
third party work at our Goodyear facility compared to the same
quarter in 2021 in which no AerSale 757 P2F conversions were in
progress. The decrease in revenue from on airport MRO activities
was partially offset by higher revenue from component MRO.
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented,
“I am pleased to report that we set another record for the Company
in the second quarter, with sales growth of over 50% and adjusted
EBITDA growth over 35%. This is a remarkable result that is
attributable to the dedication of all our team members to execute
efficiently on our 757 P2F conversion program, which has driven
results since the program inception, combined with a strengthening
commercial backdrop boosting higher sales of Used Serviceable
Material (USM).”
Finazzo added, “We reached an important milestone in our
AerAware program, with the completion of software validation by our
partner, Elbit Systems subsidiary, Universal Avionics. Software
development to optimize it for the 737 platform represents more
than two years of work by our collective team. We have also
completed a third set of demonstration flights to the FAA, in
anticipation of performing our final FAA certification flights to
obtain the AerAware STC in the coming months. With the introduction
of AerAware to commercial airlines we expect the market to eagerly
adopt this technology, particularly as it stands to significantly
increase operational safety, efficiency, and on-time performance
during limited visibility conditions, while minimizing flight
delays, diversions, fuel burn and carbon emissions.”
GAAP net income for the second quarter of 2022 was $26.5 million
or 18.9% of sales compared to $16.5 million or 18.0% of sales in
the second quarter of 2021. AerSale recognized a mark-to-market
adjustment income related to the private warrant liability of $1.4
million, $3.9 million of stock-based compensation expenses within
payroll expenses, $1.8 million in non-cash inventory write-offs
recorded in the cost of products line, and $0.9 million non-cash
impairment of flight equipment recorded within leasing costs during
the second quarter. In the second quarter of 2021, the
mark-to-market adjustment expense to the private warrant liability
was $0.4 million, the non-cash inventory write-offs were $4.8
million and stock-based compensation expenses were de minimis.
Adjusted Net Income excluding these non-cash items was $31.7
million in the second quarter of 2022 and $21.8 million in the
second quarter of 2021. Diluted earnings per share was $0.47 for
the second quarter of 2022 compared to $0.38 in the second quarter
of 2021. Adjusted for the non-cash items noted above, diluted
earnings per share was $0.56 for the second quarter of 2022 and
$0.50 in the second quarter of 2021. Please see the non-GAAP
reconciliation table at the end of this press release for
additional details on adjusted Net Income and adjusted diluted
earnings per share.
Adjusted EBITDA in the second quarter of 2022 was $41.1 million,
or 29.4% of sales, compared to $30.4 million, or 33.1% of sales in
the second quarter of 2021. Higher adjusted EBITDA was a result of
the increase in flight equipment sales and associated contribution,
which was partially offset by $8.4 million in Payroll Support
Program proceeds recognized during the second quarter of 2021.
There were no corresponding proceeds in the current quarter. Please
see the non-GAAP reconciliation table at the end of this press
release for additional details on adjusted EBITDA.
Year-to-date cash flows from operating activities was $41.2
million as of June 30th, 2022 primarily due to strong GAAP net
income results and $13.4 million of cash flow related to
monetization of inventory, partially offset by $28.8 million of
previously collected deposits related to completed flight equipment
sales. The Company ended the quarter with $197.2 million of cash
and has an undrawn $150 million credit facility.
Second Quarter 2022 Results of Operations
AerSale reported revenue of $139.6 million in the second quarter
of 2022, which included $92.5 million of flight equipment sales.
The Company’s revenue for the second quarter of 2021 was $91.9
million and included $42.7 million of flight equipment sales. As a
reminder to investors, flight equipment sales may significantly
vary quarter-to-quarter, and AerSale believes full-year analysis,
rather than year-over-year quarterly comparisons is a more
appropriate measurement of Company progress.
Asset Management Solutions (AMS) revenue increased by 90.0% to
$114.5 million in the second quarter of 2022 primarily due to the
above-mentioned flight equipment sales. USM parts sales also
improved in the second quarter of 2022, as demand for USM parts
climbed due to the recovery in passenger travel as compared to the
prior year period. In addition, leasing revenue rose in the second
quarter of 2022 compared to the second quarter of 2021, as volume
and utilization of the Company’s leased flight equipment was
stronger.
Revenue from TechOps decreased 20.7% to $25.1 million in the
second quarter of 2022, largely on account of lower storage
maintenance at AerSale’s Roswell and Goodyear facilities as the
return of third party aircraft into service continued. In addition,
allocation of labor and hangar space to support AerSale’s Boeing
757 P2F conversion line reduced available capacity and MRO revenue
for third party work at our Goodyear facility compared to the same
quarter in 2021 in which no AerSale 757 P2F conversions were in
progress. The decrease in revenue from airport MRO activities was
partially offset by revenue from component MRO activities.
Gross margin was 39.4% in the second quarter of 2022 compared to
33.4% in the year ago period mainly due to the sale of higher
margin flight equipment.
Selling, general and administrative expenses, excluding Payroll
Support Program proceeds, were $23.5 million in the second quarter
of 2022 compared to $17.0 million in the second quarter of 2021.
AerSale received $8.4 million in Payroll Support Program proceeds
during the second quarter of 2021 and did not receive any Payroll
Support Program proceeds in the second quarter of 2022. The Company
also incurred $3.9 million of stock-based compensation expenses in
the second quarter of 2022, which was de minimis in the second
quarter of 2021.
Income from operations was $31.5 million in the second quarter
of 2022 versus $22.2 million in the second quarter of 2021.
Income tax expense was $6.3 million in the second quarter of
2022 compared to $5.1 million in the second quarter of 2021.
GAAP net income was $26.5 million in the second quarter of 2022,
up 59.9% from $16.5 million in the second quarter of 2021. Adjusted
for stock-based compensation, mark-to-market adjustment to the
private warrant liability, non-cash inventory write-offs, and
non-cash impairment of flight equipment, Adjusted Net Income was
$31.7 million in the second quarter of 2022 and $21.8 million in
the second quarter of 2021. Diluted earnings per share increased to
$0.47 for the second quarter of 2022 from $0.38 in the second
quarter of 2021. Adjusted for the non-cash items noted above,
diluted earnings per share was $0.56 in the second quarter of 2022,
compared to $0.50 in the second quarter of 2021.
Adjusted EBITDA in the second quarter of 2022 was $41.1 million,
or 29.4% of sales, compared to $30.4 million, or 33.1% of sales in
the second quarter of 2021. The improvement in adjusted EBITDA was
largely attributable to an uptick in revenues from higher margin
businesses. Adjusted EBITDA for the second quarter of 2021
reflected the benefit from $8.4 million in Payroll Support Program
proceeds, for which there were no corresponding proceeds in the
second quarter of 2022.
Martin Garmendia, AerSale’s Chief Financial Officer, said: “We
are excited to report our record results this quarter where our
outstanding performance exceeded our own internal projections. We
have yet again demonstrated the strength of our purpose built model
as well as our excellent execution capabilities. We believe we are
well positioned to continue to generate strong returns to all our
stakeholders.”
2022 Guidance
AerSale reaffirmed its guidance for revenue of $420 - $450
million and adjusted EBITDA of $80 - $90 million in 2022. In
providing this guidance, the Company is mindful that recent
geopolitical events related to the Russian invasion of Ukraine may
impact the global commercial aerospace industry, but has not
specifically adjusted for these factors beyond known impacts that
the Company has already identified.
Conference Call Information
The Company will host a conference call today, August 8 2022 at
4:30 pm Eastern Time to discuss these results. A live webcast will
also be available at https://ir.aersale.com/news-events/events.
Participants may access the call at 1-877-407-3982, international
callers may use 1-201-493-6780, and request to join the AerSale
Corporation earnings call.
A telephonic replay will be available shortly after the
conclusion of the call and until August 23, 2022. Participants may
access the replay at 1-844-512-2921, international callers may use
1-412-317-6671, and enter access code 13731695. An archived replay
of the call will also be available on the Investors portion of the
AerSale website at https://ir.aersale.com/.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures,
including adjusted EBITDA, adjusted Net Income, and adjusted
diluted Earnings per Share. AerSale defines adjusted EBITDA as net
income (loss) after giving effect to interest expense, depreciation
and amortization, income tax expense (benefit), and other
non-recurring or unusual items. Adjusted Net Income is defined as
net income (loss) after giving effect to mark-to-market adjustments
relating to our Private Warrants, stock-based compensation expense
and other non-recurring or unusual items. Adjusted diluted earnings
per share also exclude these material non-recurring or unusual
items.
AerSale believes these non-GAAP measures of financial results
provide useful information to management and investors regarding
certain financial and business trends relating to AerSale’s
financial condition and results of operations. AerSale’s management
uses certain of these non-GAAP measures to compare AerSale’s
performance to that of prior periods for trend analyses and for
budgeting and planning purposes. These non- GAAP measures should
not be construed as an alternative to net income or net income
margin as an indicator of operating performance or as an
alternative to cash flow provided by operating activities as a
measure of liquidity (each as determined in accordance with
GAAP).
You should review AerSale’s audited financial statements, and
not rely on any single financial measure to evaluate AerSale’s
business. Other companies may calculate adjusted EBITDA, adjusted
Net Income, or Adjusted diluted earnings per share differently, and
therefore AerSale’s adjusted EBITDA, adjusted Net Income, or
adjusted diluted earnings per share measures may not be directly
comparable to similarly titled measures of other companies.
Reconciliations of Net Income, the Company’s closest GAAP
measure, to adjusted EBITDA, adjusted Net Income, and adjusted
diluted earnings per share, are outlined in the tables below
following the Company’s condensed consolidated financial
statements.
Second Quarter 2022 Financial Results
AERSALE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET
(in thousands, except share
data)
(Unaudited)
June 30,
December 31,
2022
2021
(Unaudited)
Current assets:
Cash and cash equivalents
$
197,240
$
130,188
Accounts receivable, net of allowance for
doubtful accounts of $1,272 and $1,692 as of June 30, 2022 and
December 31, 2021
43,896
42,571
Inventory:
Aircraft, airframes, engines, and parts,
net
74,327
81,759
Advance vendor payments
20,994
14,287
Deposits, prepaid expenses, and other
current assets
3,206
2,724
Total current assets
339,663
271,529
Fixed assets:
Aircraft and engines held for lease,
net
42,313
73,364
Property and equipment, net
10,052
7,350
Inventory:
Aircraft, airframes, engines, and parts,
net
67,083
77,534
Deferred income taxes
12,326
10,013
Deferred financing costs, net
774
999
Deferred customer incentives and other
assets, net
478
598
Goodwill
19,860
19,860
Other intangible assets, net
25,183
26,238
Total assets
$
517,732
$
487,485
Current liabilities:
Accounts payable
$
22,180
$
19,967
Accrued expenses
6,817
8,424
Income tax payable
7,537
3,443
Lessee and customer purchase deposits
6,437
33,212
Deferred revenue
7,207
2,860
Total current liabilities
50,178
67,906
Long-term lease deposits
-
2,053
Maintenance deposit payments and other
liabilities
1,881
3,403
Deferred income taxes, net
1,113
1,113
Warrant liability
3,983
4,131
Total liabilities
57,155
78,606
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized 200,000,000 shares; issued and outstanding 51,706,168
and 51,673,099 shares as of June 30, 2022 and December 31, 2021,
respectively
5
5
Additional paid-in capital
321,918
313,901
Retained earnings
138,654
94,973
Total stockholders' equity
460,577
408,879
Total liabilities and stockholders’
equity
$
517,732
$
487,485
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except per share
data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenue:
Products
$
108,622
$
56,175
$
200,990
$
81,301
Leasing
7,355
6,366
15,556
12,622
Services
23,631
29,380
45,868
56,433
Total revenue
139,608
91,921
262,414
150,356
Cost of sales and operating expenses:
Cost of products
63,019
40,387
120,947
54,193
Cost of leasing
2,531
2,464
4,720
5,231
Cost of services
19,078
18,332
35,064
40,359
Total cost of sales
84,628
61,183
160,731
99,783
Gross profit
54,980
30,738
101,683
50,573
Selling, general, and administrative
expenses
23,503
16,966
47,269
30,276
Payroll support program proceeds
-
(8,405)
-
(14,768)
Income from operations
31,477
22,177
54,414
35,065
Other income (expenses):
Interest expense, net
(183)
(251)
(378)
(509)
Other income, net
116
155
481
249
Change in fair value of warrant
liability
1,382
(407)
148
(631)
Total other income (expenses)
1,315
(503)
251
(891)
Income before income tax provision
32,792
21,674
54,665
34,174
Income tax expense
(6,337)
(5,126)
(10,984)
(7,608)
Net income
$
26,455
$
16,548
$
43,681
$
26,566
Earnings per share - basic
$
0.51
$
0.39
$
0.85
$
0.62
Earnings per share - diluted
$
0.47
$
0.38
$
0.81
$
0.61
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended June
30,
2022
2021
Cash flows from operating activities:
Net income
$
43,681
$
26,566
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,757
6,699
Amortization of debt issuance costs
225
257
Inventory reserve
1,810
5,016
Impairment of aircraft held for lease
857
-
Provision for doubtful accounts
(419)
(151)
Deferred income taxes
(2,313)
(284)
Change in fair value of warrant
liability
(148)
631
Stock-based compensation
7,672
150
Changes in operating assets and
liabilities:
Accounts receivable
(907)
(1,586)
Inventory
13,369
(33,417)
Deposits, prepaid expenses, and other
current assets
(482)
5,750
Deferred customer incentives and other
assets
111
(19)
Advance vendor payments
(6,707)
(4,536)
Accounts payable
2,213
28
Income tax payable
4,094
1,013
Accrued expenses
(1,609)
(3,425)
Deferred revenue
4,347
(306)
Lessee and customer purchase deposits
(28,825)
5,934
Other liabilities
(1,522)
316
Net cash provided by operating
activities
41,204
8,636
Cash flows from investing activities:
Proceeds from sale of assets
35,707
4,420
Acquisition of aircraft and engines held
for lease, including capitalized cost
(6,463)
-
Purchase of property and equipment
(3,741)
(841)
Net cash provided by investing
activities
25,503
3,579
Cash flows from financing activities:
Cash paid for employee taxes on
withholding shares
-
(269)
Proceeds from exercise of warrants
-
545
Proceeds from the issuance of Employee
Stock Purchase Plan shares
345
-
Net cash provided by financing
activities
345
276
Increase in cash and cash equivalents
67,052
12,491
Cash and cash equivalents, beginning of
period
130,188
29,317
Cash and cash equivalents, end of
period
$
197,240
$
41,808
Supplemental disclosure of cash
activities
Income taxes
9,572
1,815
Interest
426
308
Supplemental disclosure of noncash
investing activities
Reclassification of aircraft and aircraft
engines inventory (from) equipment held for lease, net
(17,060)
(7,307)
Reclassification of customer purchase
deposits to sale of assets
12,500
-
Adjusted EBITDA, Net Income and
Diluted EPS Reconciliation Table (In ‘000s, except per share
data)
(Unaudited)
Three months ended June
30,
2022
% of Total Revenue
2021
% of Total Revenue
Reported Net Income/(Loss)
$
26,455
18.9
%
$
16,548
18.0
%
Addbacks:
Change in FV of Warrant Liability
(1,382
)
(1.0
%)
407
0.4
%
Stock Compensation
3,917
2.8
%
75
0.1
%
Inventory Write-Off
1,845
1.3
%
4,776
5.2
%
Impairment in Flight Equipment
857
0.6
%
-
0.0
%
Adjusted Net Income
$
31,693
22.7
%
$
21,806
23.7
%
Interest Expense
183
0.1
%
251
0.3
%
Income Tax Expense (Benefit)
6,337
4.5
%
5,126
5.6
%
Depreciation and Amortization
2,891
2.1
%
3,212
3.5
%
Adjusted EBITDA
$
41,104
29.4
%
$
30,395
33.1
%
Reported Basic EPS
0.51
0.39
Addbacks:
Change in fair value of warrant
liability
(0.03
)
0.01
Stock-based compensation
0.08
0.00
Inventory Write-Off
0.04
0.11
Impairment in Flight Equipment
0.02
-
Adjusted Basic EPS
$
0.61
$
0.51
Reported Diluted EPS
0.47
0.38
Addbacks:
Change in FV of warrant liability
(0.03
)
0.01
Stock-based compensation
0.07
0.00
Inventory Write-Off
0.03
0.11
Impairment in Flight Equipment
0.02
-
Adjusted Diluted EPS
$
0.56
$
0.50
Forward Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including without
limitation statements regarding our anticipated financial
performance, including all statements set forth in the “2022
Guidance” section above such as expectations of revenue in the
range of $420 - $450 million and adjusted EBITDA in the range of
$80 - $90 million; our expectations that demand for P2F conversions
will allow monetization of the remaining Boeing 757 package in
through 2024; anticipations regarding an increasingly favorable
market for feedstock availability within AerSale’s USM business;
our plans to continue to direct our resources toward the highest
generating rates of return for our shareholders; expectations
regarding feedstock as a cornerstone of our strategy, and our
belief that we are extremely well positioned to take advantage of
the current market dynamic; our belief that our purpose built model
continues to generate strong returns to stakeholders and is
supported by best-in-class execution; our belief that we are very
well positioned to take advantage of asset availability; our growth
trajectory; the impact of investments in our Boeing 757 program on
our financial performance; our ability to sell our aircraft on the
timelines we anticipate; the expected operating capacity of our MRO
facilities and demand for such services; expectations of market
recovery and recommissioning of aircraft; the expected commencement
date of sales of our AerAware product; and our anticipated revenue
split between our two segments. AerSale’s actual results may differ
from their expectations, estimates and projections and
consequently, you should not rely on these forward-looking
statements as predictions of future events. Words such as “expect,”
“estimate,” “project,” “budget,” “forecast,” “anticipate,”
“intend,” “plan,” “may,” “will,” “could,” “should,” “believes,”
“predicts,” “potential,” “continue,” and similar expressions are
intended to identify such forward-looking statements. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this presentation, including without
limitation, the impact of the COVID-19 pandemic; factors adversely
impacting the commercial aviation industry; events related to the
war in Ukraine including economic and trade sanctions; the
fluctuating market value of our products; our ability to repossess
mid-life commercial aircraft and engines; our ability to comply
with stringent government regulation; the shortage of skilled
personnel, including as a result of work stoppages; the highly
competitive nature of the markets in which we operate; and risks
associated with our international operations, including
geopolitical events such as the Russian invasion of Ukraine. You
should carefully consider the foregoing factors and the other risks
and uncertainties described in the “Risk Factors” section of the
Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC"), and its other filings
with the SEC, including its subsequent quarterly reports on Form
10-Q. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and AerSale Corporation assumes no obligation and does
not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise, except as required by law.
About AerSale
AerSale serves airlines operating large jets manufactured by
Boeing, Airbus and McDonnell Douglas and is dedicated to providing
integrated aftermarket services and products designed to help
aircraft owners and operators to realize significant savings in the
operation, maintenance and monetization of their aircraft, engines,
and components. AerSale’s offerings include: Aircraft &
Component MRO, Aircraft and Engine Sales and Leasing, Used
Serviceable Material sales, and internally developed ‘Engineered
Solutions’ to enhance aircraft performance and operating economics
(e.g. AerSafe™, AerTrak™, and now AerAware™).
____________________________________
1 A reconciliation of non-GAAP adjusted EBITDA guidance to net
income, the most directly comparable GAAP (Generally Accepted
Accounting Principles) measure, has not been provided due to the
lack of predictability regarding the various reconciling items such
as the provision for income taxes and depreciation and
amortization, which are expected to have a material impact on these
measures and cannot be reasonably predicted without unreasonable
efforts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220808005734/en/
Media: For more information about AerSale, please visit
our website: www.AerSale.com. Follow us on: LinkedIn | Twitter |
Facebook | Instagram AerSale: Craig Wright Telephone: (305)
764-3200 Email: media.relations@aersale.com Investor:
AerSale: AersaleIR@icrinc.com
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